STEELE CITY, Neb. — At the Salty Dog Saloon in rural southeastern Nebraska, there is a strange form of graffiti: union stickers.
The adhesives advertising organized labor unions are attached to surfaces all over the eating place and watering hole in Steele City, population about 50, despite a dearth of industry and factories.
Jefferson County, Nebraska, is home to about 7,500 souls all told and produces about 12 million bushels of corn a year. The largest single employer is either the brickyard in Endicott or the community health system, according to county officials.
But that doesn’t stop pipefitters, ironworkers, electricians and members of similar trades at the Salty Dog from festooning the glass door of the beer cooler and restroom walls with stickers trumpeting their favorite collective bargaining unit, some as far away as Rock Island, Illinois.
The reason? Steele City, by coincidence of geography, is one of the epicenters of the U.S. energy industry and attracts work crews from the major labor unions who fit the pipes, weld the steel and connect the circuits of area windmills, pipelines and pump stations.
The original Keystone pipeline operated by TransCanada runs from the oil hub in Hardisty in Canada to Steele City, transporting about 600,000 barrels per day through the terminus in Jefferson County before it is sent off elsewhere by still more pipelines. This original Keystone pipeline was completed in 2010.
Demand for Canadian crude is so robust that TransCanada has proposed an additional pipeline, the long-debated Keystone XL originating in Canada, running south and also terminating in Steele City. It would bring almost a million barrels a day to the region.
If the Keystone XL isn’t approved, TransCanada says it plans to build a massive oil-by-rail terminal — in Steele City, of course — to move Canadian and North Dakota crude south by train for insertion into the pipeline complex in the tiny Jefferson County town.
In addition, the hills near the town are home to Nebraska’s fourth-largest collection of windmills, a fleet of 44 turbines between Steele City and neighboring Odell.
All told, the town that most people have never heard of is equipped with an astounding array of energy projects. As for the union stickers, they come from the small permanent union cadre as well as those who periodically spend a few days or weeks in the area servicing the equipment.
“They tip as well as the bikers,” said Angela Erickson, bartender and waitress at the Salty Dog, a popular weekend riding destination for motorcycle riders. “At lunch, that can mean an extra $25 in tips some days.”
The prospect of more energy investment for Steele City was raised in May, when Calgary-based TransCanada, owner of 35,500 miles of North American energy pipelines, said it was discussing with oil customers the prospect of shipping Canadian crude to the United States by rail if the Keystone XL continued to face approval delays.
TransCanada Chief Executive Russ Girling that month told conference attendees in New York “we are absolutely considering a rail option.” The rail shipments would run from Hardisty in Canada, TransCanada’s main storage and pipeline hub, to Steele City.
From there, the oil would be offloaded into Steele City’s existing pipeline, the original Keystone, for distribution elsewhere. A typical oil train can move about 100,000 barrels per day, requiring a rail terminal capable of handling such volume.
“It may involve the construction of some new loading and offloading facilities and that has to be determined,” said Davis Sheremata, a TransCanada spokesman, speaking of the company’s rail option.
But that all depends on the Keystone XL, a $5.4 billion project that would carry up to 830,000 barrels per day from the Alberta oil sands to the U.S. Gulf Coast via Steele City. The pipeline has been delayed for about five years pending approval from the U.S. federal government. Environmental opposition has been stiff.
But not in Steele City, where nobody seems to mind.
“People here are in favor of it,” said Michael Dux, a Jefferson County Board member at the county seat in Fairbury, a town of about 5,000 people about six miles from Steele City. “The only people against anything are the ones against it being on someone else’s land instead of theirs.”
Critics have called the one-time payments landowners get in return for allowing the pipeline on their land nominal and far too low for the power ceded to the operator. Opponents also say spills would damage private property and water supplies and put the Ogallala Aquifer at risk.
The project, critics say, also provides incentives for additional oil production from marginal reserves, worsening climate damage from fossil fuels. Landowners opposed to the pipeline have filed a suit over it, saying the Nebraska law that is used to site pipelines is unconstitutional.
TransCanada’s other option — oil by rail — isn’t without critics of its own. Railroads are now moving roughly 57 times more oil annually than they were during the period from 2005 to 2009, the American Association of Railroads says.
With the rail transport of inflammable liquid comes danger. A Quebec town was half destroyed and dozens killed when an oil train ran out of control and exploded last year. State governments around the country are pressing to know when and where the crude trains roll for emergency planning.
Steele City didn’t start out as an energy hub.
It began as most rural Nebraska towns, with settlers moving in to farm after the 1803 Louisiana Purchase added what became the Cornhusker State to the republic. First came a flour mill. By 1868, there was a school. The town was founded in 1873 and named for a railroad executive for the St. Joseph and Denver City line.
“There is an excellent grade school under the efficient charge of Mrs. Melville, with three grades,” reads the Nebraska State Gazeteer and Business Directory of 1882-83, cited in a county historical society pamphlet at the public library in Fairbury.
As for how Steele City became an energy hub, no one seems to know for sure.
“It’s just a natural crossroads,” said TransCanada spokesman Mark Johnson. “It is very centrally located to the rest of the nation.”
The area has more going for it than a convenient spot for some company planner to mark with an “X.” It is blessed with breeze.
The 44-turbine Steele Flats Wind Farm between Steele City and Odell began commercial operation in November 2013. The farm has the capacity to power 19,000 average Nebraska homes for a year. Nebraska Public Power District has agreed to buy the farm’s output but will sell 30 megawatts of renewable energy credits from the farm to an industrial customer operating in another part of the state.
Steele City Mayor Bill Scheele, who was born there, said he doesn’t know what destined Steele City for its position in the energy world; the first oil pipelines he remembers hearing about in the area were laid down in the 1950s.
“It has brought a lot to this town,” Scheele said of the energy projects. “And it still brings a lot because they are out here checking them all the time.”
Scheele said most people in town now are widows of farmers or retired farmers; he scoffed when asked about the town’s population, listed at 61 on the road sign.
“No,” he drawled dismissively. “Less than 50 is probably about right.”
Gone are the hospital where Scheele was born (“it cost $87 and my mother stayed two weeks”), the cafes, the hotel, the grocery stores and the lumberyard. All that really remains beyond the handful of houses: the saloon and the U.S. post office that Scheele runs as a contractor of the federal agency.
Scheele said the town’s population fell steadily in the 1970s after Union Pacific Railroad, whose line divides Steele City in two, began automating and centralizing maintenance. Up until then, he said, railroads employed section crews who were responsible for a stretch of line and in many cases lived near it.
“We are just a little old town now,” Scheele said. “It all changed when the railroads pulled out the section gangs and started to modernize in the 1970s.”
Across the street from the post office at the Salty Dog, waitress Erickson said she has had to adapt to the tastes of the incoming work crews. She said her ear tells her that many are from the Southern United States, states that have been supplying workers to the petroleum industry for decades.
“They always ask for sweet tea,” Erickson said. “At first I told them I have tea and have sweetener, but I don’t have sweet tea. But I learned to make my own and now keep it on hand always.”
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